KUALA LUMPUR, Aug 29 (Reuters) - Perusahaan Otomobil Nasional Bhd (Proton), Malaysia's leading car maker, reported on Friday a 45 percent drop in first quarter earnings and warned of continuing tough times ahead.
Net profit fell to 158.1 million ringgit ($41.6 million) in the three months that ended June 30 from 289.6 million ringgit in the same period a year earlier.
Proton attributed the lower profit to a 30 percent drop in sales to 1.9 billion ringgit.
"Consumer sentiment is expected to remain weak as the domestic market edges closer to AFTA with potential buyers deferring purchases in the hope of better deals after 31 December 2004," Proton said in its financial statement.
Motorists are waiting for prices to fall ahead of the Malaysian auto sector's delayed entry into the Association of South East Asian Nations Free Trade Area (AFTA) in 2005.
Under AFTA rules, tariffs on imports would be cut to between zero and five percent. Malaysia's current tariffs on imported cars are as high as 300 percent.
Malaysia was allowed to delay applying AFTA rules to cars in order to allow its domestic car industry -- dominated by Proton , which accounts for 60 percent of the country's car market -- time to shape up.
Proton said sales dropped to 47,726 units in the first quarter from 65,039 units in the same period of 2002. It said it would continue to respond to the current competitive environment by introducing new variants and models.
Reuters Research showed a consensus net profit for Proton in the financial year to end-March 2004 at 882.3 million ringgit, down from 1.1 billion ringgit in the previous year.
Proton shares ended down 3.8 percent at 7.70 ringgit on Friday.
($1 = 3.8 ringgit)